Why Paying Health Care Providers for Outcomes Benefits Everyone

Dr. Thomas L. Simmer, M.D.

| 4 min read

SVP and Chief Medical Officer

There’s a movement among insurers policymakers and health care leaders about embracing pay-for-performance as a way to improve health care quality and lower costs. In recent weeks, Blue Cross has announced contracts based on this model of reimbursement with both Beaumont Health System and St. John Providence Health System. So what exactly will performance-based health care look like? Blue Cross Blue Shield of Michigan recently announced a partnership with St. John Providence to launch the first such model in the state. And last week we announced a similar contract with Beaumont, ending a long-running dispute that threatened to end the hospital system’s participation with Blue Care Network. Our goal in both cases is to construct a better system of managing patient health, with hospitals, physicians and insurers working together to increase the value of medical care provided to patients. Hospitals, in turn, would see their reimbursements improve as a reward for more successful management of the health of their entire patient population. This approach moves dramatically away from the long-established fee-for-service model where insurers pay for every test and procedure conducted on a patient, regardless of whether patient health improves because of them. Fee-for-service is an antiquated approach. Reimbursements climb the more tests, procedures and other services are performed. The incentive for hospitals is to churn as much volume as possible through the facility — more patients, more tests, more surgeries, more admissions and more delays in the hospital. This model has fueled the huge increases in health care costs we’ve seen in the past decade, yet it’s done little to improve patient outcomes in the U.S., which lag behind other industrialized nations.
The new model encourages hospitals to move away from the quantity of services performed on patients in favor of quality of services. It also encourages physician organizations and hospitals to join forces and build better systems of sharing patient information and coordinating the delivery of care. Long-term, St. John Providence may well see lower utilization of things like high-tech radiation scans and even hospital admissions. But if more patients get healthier more quickly, their hospitals will benefit financially from incentive payments for achieving these goals — all of which are in the best interest of the patient. Patients likely won’t notice any change in the quality of care they receive. If anything, they’ll encounter less frustration over redundant services and administrative headaches as the coordination of care improves. While the details of the performance-based standards at Beaumont are pending, the Blues will support the funding of IT and other infrastructure improvements at the five participating St. John Providence hospitals until the new model begins in 2013. Some of the value-based improvements the hospitals must make include:
  • Development of a fully functioning integrated Organized System of Care all-patient registry system
  • Development of an integrated performance measurement system
  • Better coordinated processes of care so that patients have smooth transitions from their primary care physicians to specialists or hospitals
  • Capability to measure a patient’s experience with care
Patients will also notice an increase in attention from their providers. Clinical staff will be more prepared in advance for their visit, having pulled information on things like whether or not they’re up to date in immunizations or which medications they should or should not be taking. Doctors will be able to more proactively support their patients’ needs. That leads to less redundancy, waste and time spent on administrative tasks for providers and hopefully, more time with patients. It’s our hope that the agreements with the two Detroit-area health systems will help other hospitals realize that the performance-based model is both achievable and desirable for a better-functioning, lower-cost health care system. Many hospitals across Michigan are already expressing interest in joining us in moving to a performance-based system. It’s been our experience through initiatives like our Patient-Centered Medical Home program that sustained efforts to improve the quality of care also helps put the brakes on runaway health care costs. With more proactive patient care, better communication and improved coordination of care, there’s less waste in the health care system. And that benefits us all. Thomas Simmer is Senior Vice President, Health Care Value and Chief Medical Officer for Blue Cross Blue Shield of Michigan.
MI Blues Perspectives is sponsored by Blue Cross Blue Shield of Michigan, a nonprofit, independent licensee of the Blue Cross Blue Shield Association